3.4.1. Setting Operational Objectives: Internal and External Influences on Operations Objectives. Flashcards
Outline corporate objectives as an internal factor.
Operations department must ensure that its objectives are consistent with the corporate objectives of the business.
Outline finances as an internal factor.
Operations management objectives rely on considerable expenditure on capital equipment or research and development. Therefore, a healthy financial situation is necessary.
Outline human resources as an internal factor.
The skills, training and motivation of HR will have a major impact on operational objective. If there are weaknesses in human resources, less ambitious objectives will need to be set.
Outline resources available as an internal factor.
If the business is well resourced e.g. state of the art machinery and a good quality reputation - easier to produce high quality products cost effectively.
Outline the nature of the product as an internal factor.
Some products are suited to mass production - others more appropriate for individual methods of production - type of quality can affect the ease with which high quality and good customer service can be achieved.
Impact of product on environment will vary depending on the nature of the product.
All factors in which a business must take into account when setting its operational objectives.
Outline market factors as an external factor.
Growth or decline of a market - major impact on a businesses operations management objectives.
Demand change - may have to modify production levels.
Sales decline - may need to introduce new product to replace those in decline.
Outline competitors actions and performance as an external factor.
Competitors actions - may encourage a business to introduce new products that are proving successful for competitors.
May also confirm that a type of product is declining in the market.
Outline technological change as an external factor.
Impacts costs - quality of it’s products, ways in which waste can be reduces and the level of productivity within a business.
These four factors are key performance targets for the operations management function of most business - arguably the most important factor to take into consideration.
What is an example of an economic factor?
Interest rates - major impact on operations management targets.
What is the effectiveness of operations management dependant on?
Capital investment.
What two negative effects can an increase in interest rates have on the success of operations management?
Increase costs by increasing the rate of interest paid on loans - reducing profitability of investment - certain projects e.g., the introduction of new machinery must be delayed - reducing production efficiency.
May reduce sales levels -cannot afford loan repayments - cut back on purchases - lower level of output required - some targets e.g., low unit costs will be harder to achieve as bulk buying opportunities have been reduced.
Outline political factors as an external factor.
Operations Management (OM) departments (OMD) - often responsible for targets related to minimising production costs - bring conflict with politicians -disagree wit the methods used to reduce costs - especially if this involves potential exploitation of workers - unsafe factory working conditions.
Outline legal factors as an external factor.
Potential health and safety risks - om function is heavily controlled by legislation.
Outline environmental factors as an external factor.
Environmental legislation and pressures - close control in terms of the products they can produce, the ingredients and raw materials they use, and the manufacturing processes that take place in their factories.
Outline suppliers as an external factor.
Businesses work closely with suppliers - ensures flexibility, high quality and low cost materials. Suppliers that meet these three factors help businesses’ to achieve its om targets and to compete effectively with rivals.
